Hello, and welcome to today's Northwest Natural Holding Company Fourth Quarter 2022 Earnings Call. My name is Bailey, and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions-and-answers at the end. [Operator Instructions] I would now like to pass the conference over to our host, Nikki Sparley, Director of Investor Relations. Nikki, please go ahead.

Thank you, Bailey. Good morning, and welcome to our fourth quarter 2022 earnings call. As a reminder, some things that will be said this morning contain forward-looking statements. They are based on management's assumptions, which may or may not occur. For a complete list of cautionary statements, refer to the language at the end of our press release. We expect to file our 10-K later today. As mentioned, this teleconference is being recorded and will be available on our website following the call. Please note, these calls are designed for the financial community. If you are an investor and have additional questions after the call, please contact me directly at 503-721-2530. News media may contact David Roy at 503-610-7157. Speaking this morning are David Anderson, President and Chief Executive Officer; and Frank Burkhartsmeyer, Senior Vice President and Chief Financial Officer. David and Frank have prepared remarks and then will be available, along with other members of our executive team to answer your questions. With that, I will turn it over to David.

Well, thank you, Nikki, and good morning, and welcome everybody. 2022 was a transformative year on many fronts. We grew our gas and water utilities. We began operation of our first renewable natural gas facility under the landmark Oregon Senate Bill 98 legislation, which is now producing RNG on behalf of our gas utility customers. We closed our largest water and wastewater acquisition to-date and construction began on the first of the facilities that we're investing in through our competitive renewable natural gas business. We also increased dividends for the 67th year and were recognized by Ethisphere as one of the 2022s world's most ethical companies. For 2022, we reported net income of $86.3 million or $2.54 per share. That's an increase of $7.6 million or around 10% compared to net income of $78.7 million or $2.56 per share in 2021. Higher revenues in Oregon drove results at the natural gas utility, along with solid customer growth. This morning, I'll walk through some economic indicators and notable trends coming out of the winter heating season. Frank will go through the financial results, and then I'll wrap up with an update on our decarbonization initiatives at our gas utility and a business update for water and the competitive renewable natural gas business. Turning to a few comments on the economy. In our gas utility service territory, we continue to see GDP growth at a good clip, while the housing market has moderated from its highs in 2021. In Oregon, employment grew at a strong annualized rate of 4% in the fourth quarter. Unemployment was 4.5% in December 2022, up from a low of 3.5% in July of last year. As expected, single-family housing activity cooled as interest rates rose last year. Home sales, new listings and average prices were all down.…

Thank you, David, and good morning, everyone. I'll begin by discussing the highlights for the fourth quarter and full year 2022 results and conclude with guidance for 2023. I'll describe earnings drivers on an after-tax basis using the statutory tax rate of 26.5%. As a reminder, Northwest Natural's earnings are seasonal with a majority of revenues and earnings generated in the first and fourth quarters during the winter heating months. For the fourth quarter, we reported net income of $47.9 million or $1.36 per share compared to net income of $40.5 million or $1.32 per share for the same period in 2021. On a quarter-over-quarter basis, our gas utility provided an additional $7.4 million or $0.05 per share due to higher earnings from increased revenues and lower pension expense. Our other businesses posted a profit on par with last year's results. Higher earnings at the gas utility were primarily related to new rates for Oregon and Washington, along with lower pension expense, which was partially offset by higher operating expenses. Utility margin in the Gas Distribution segment increased $12.6 million as a result of the new rates and customer growth. Utility O&M increased $4.1 million, reflecting higher levels of expense for contractor and professional services and information technology costs. Utility depreciation and general taxes increased $1.8 million due to higher property, plant and equipment as we continue to invest in our system. Other income net improved $2.8 million, primarily from lower pension expense. Interest expense increased $2.3 million due to a combination of higher rates on commercial paper and incremental long-term debt issued to fund rate base growth. For the full year 2022, we reported net income of $86.3 million or $2.54 per share, combined to net income of $78.7 million or $2.56 for 2021. While net income grew $7.6…

Thank you, Frank. Turning to a few updates on our key long-term objectives. Our long-standing core value of environmental stewardship is a driving force behind the choices we make every day in our operations and in planning for the future. We believe climate change requires a rapid innovation and collective action, which is why we're committed to reimagining the role of our system and the fuel we deliver. We're taking tangible steps forward today. Our engineering team completed 15% hydrogen blend test at our Sherwood operations and training center at the end of 2022, with solid results that allow us to confidently move forward with testing a 20% blend this year. We're also continuing to work on an exciting turquoise hydrogen pilot project to turn methane into clean hydrogen and solid carbon. We'll be testing this groundbreaking technology at our Portland operations facility soon. This project is in partnership with Modern Electron, and we continue to expect the project to go live in the first half of this year. We've signed contracts with several of our commercial customers to also pilot new CarbinX equipment. This equipment captures carbon from existing boilers to reduce both energy use and greenhouse gas emissions. The carbon dioxide is converted to potassium carbonate, which is blended into SOP [ph] products. We believe both of these technologies have great promise and are excited to be at the forefront of bringing them to market. And we're not alone in embracing decarbonization for the gas utility system. As part of our focus on innovation and collaboration, Northwest Natural team members joined policymakers on an RNG and clean hydrogen fact-finding trip to Denmark to understand how they're already implementing these strategies. Notably, Denmark is already delivering roughly 30% RNG in its gas system and is working towards meeting 75%…

Well, thank you, Bailey. We must have been very thorough in our prepared remarks, but I also know it's a Friday. So, if you have any questions after you review materials, everybody knows to reach out to Nikki Sparley, and she'll be happy to help in any way she can. With that, we'll conclude the call. Have a great weekend, everybody, and thanks for joining us.

This concludes today's conference call. Thank you all for your participation. You may now disconnect your lines.